Regulatory Bodies
1) Reserve Bank of India
• When established? On April 1, 1935 under RBI Act, 1934 (recommended by Hilton Young Commission)

• Headquarter – The Headquarter of the RBI is in Mumbai and it has offices at 31 locations throughout India.

• Composition – General superintendence & direction by 21-member Central Board of Directors: the Governor, 4 Deputy Governors, 2 Finance Ministry representatives, 10 government-nominated directors to represent important elements of India’s economy, and 4 directors to represent local boards headquartered at Mumbai, Kolkata, Chennai and New Delhi

Role of the RBI
A) Bank of Issue – Issuing bank notes of all denominations. As an agent of the government it has right to distribute one rupee notes & the small coins throughout the country.

B) Banker to Government – Act as an agent of Central Government and of all State Governments except that of J & K. Right to receive and make payments, and other banking operations, helps both the Union and the States to float new loans and to manage public debt.

C) Banker’s Bank & Lender of the Last Resort – The scheduled banks can borrow from the RBI on the basis of eligible securities & expect the RBI to come to their help in times of banking crisis.

D) Controller of Credit – Power to influence the volume of credit through changing the Bank rate or open market operations, to ask not to lend to particular groups or persons, to inspect the accounts of any commercial bank.

E) Custodian of Foreign Reserves – Responsibility to maintain the official rate of exchange & to act as the custodian of India’s reserve of international currencies.

F) Supervisory Functions – Powers under the Reserve Bank Act, 1934, and the Banking Regulation Act, 1949 to supervise and control commercial and co-operative banks, relating to licensing and establishments, branch expansion, management, and liquidation.

G) Adviser to Government – To advice the government on the banking and financial matters, planning, resource mobilization, international finance etc.

H) Monetary Data & Publications – To maintain & publish the monetary data and the data relating to banking for framing the economic and banking policies.

I) Banking Ombudsman Scheme – To provide an expeditious and inexpensive forum to bank customers for resolution of their grievances regarding banking services.

J) Promotional Functions – Building up and strengthening financial infrastructure, ensuring the allocation of credit in the socially desired directions like cooperative banking, agriculture & rural credit, industrial finance etc.

2) Security & Exchange Board of India (SEBI)
• When established? In 1988 through an executive resolution. Subsequently it was upgraded as a fully autonomous body (a statutory Board) in 1992 with the passing of the Securities and Exchange Board of India Act on 30th January 1992.

• Headquarter – in Mumbai & has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively. It also has local offices at Jaipur and Bangalore.

• Composition – Following members:
a) a Chairman
b) two members from the Ministry of the Central Government dealing with Finance and administration of Companies Act, 1956
c) one member from the Reserve Bank of India
d) five other members – at least three shall be whole time members to be appointed by the Central Government

• Functions of SEBI – It has three important functions as follows:
a) Protective Functions – To protect the interest of investor, provide safety of investment, check price rigging, prohibit insider trading, fraudulent and unfair trade practices etc.

b) Developmental Functions – Increase the business in stock exchange, training of intermediaries of the securities market, adopting flexible and adoptable approach by permitting internet trading, making underwriting optional to reduce the cost of issue etc.

c) Regulatory Functions – To frame rules, regulations and a code of conduct for the intermediaries such as merchant bankers, underwriters, etc. To register and regulates the working of stock brokers, merchant bankers. Regulate the working of mutual funds, takeover of the companies, conducts inquiries and audit of stock exchanges.

• Powers of SEBI – The SEBI has following powers:
a) To call periodical returns from recognized stock exchanges.
b) To compel listing of securities by public companies.
c) To levy fees or other charges for carrying out the purposes of regulation.
d) To call information or explanation from recognized stock exchanges or their members.
e) To grant approval to by laws of recognized stock exchanges.
f) To control and regulate stock exchanges.
g) To direct enquiries to be made in relation to affairs of stock exchanges or their members.
• In any country, the financial system plays as a mediator between lenders and borrowers. The investors always need adequate protection to encourage more savings and investments. The SEBI is one of such institutions.
• In general, the financial market is divided into two parts, one is money market and another one is capital market. Money market is a market which provides short term finance while capital market provides medium and long term finance. Securities market is an organized capital market. Securities market is divided into as primary market and secondary market.